Super Isa washout? Majority are unaware of new tax-free savings limit while just a third of savers will add to nest egg

The majority of Brits are unaware of new tax-free savings limits coming into force next week while a lack of top rates has left appetite minimal, research has found.

From 1 July, savers can top up their tax-free Isas to £15,000 for the current financial year and for the first time, the full allowance can be held in a cash Isa, a significant lift from the current £5,940 limit.

However, according to a survey by comparison website Moneysupermarket.com, 63 per cent are oblivious to the introduction of the super Isa – otherwise known as a Nisa - despite being one of the major changes in George Osborne’s Budget in March.

Triple limit: Next week, savers will be able to put almost three times the current tax-free amount into a cash Isa

This rises to 68 per cent to those aged under 34 and 70 per cent of those aged between 35 and 54.

In addition, of those who are aware of the new Isas, a quarter still don’t understand the different rules being introduced.

Just over a third who do know about the new super Isas said they are likely to take advantage, while a further third state they are unlikely to.

Appetite for super Isas is also affected by region as well as the research found that half of Londoners, 38 per cent of those living in the South West and 37 per cent in Yorkshire and the Humber are likely to make the most of the new allowance.

The lack of appetite for the super Isa may largely be because of poor rates and lack of innovation currently on offer.

Data from the comparison website show that over the last three months, hardly anything has changed, with the average rate on the top five best buy easy-access Isas remaining exactly the same at 1.63 per cent.

However, savers could save an extra £240 on average by switching from an Isa with the average rate of 0.65 per cent to the best buy of 2.25 per cent on offer from Harpenden Building Society - although this is only on offer to existing customers.

Kevin Mountford, head of banking at Moneysupernarket, said: ‘While it is encouraging news that some consumers want to make the most of the Nisa introduction, and stash more away in the savings pot, the current rates on offer are stagnant and uncompetitive.

‘Savers must be prepared to shop around for the best deals and switch if they can make more money elsewhere, especially as many banks are not proactive in helping you with this. By doing nothing you are simply playing into the hands of providers so it is important to look around and challenge the banks.’

Moneysupermarket also asked those who currently save into a cash Isa whether they believe the changes will make them save more on a yearly basis.

More than one in four think that they will save more, with eight per cent believing they will save up to 10 per cent more than they do now.

In addition, six per cent predict they will save between 10 and 20 per cent more with a further six per cent envisaging they will save over 50 per cent more than they do at present.

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A substantial two-fifths of the younger generation of 18 to 34 year olds think they will save more with the introduction of super Isas, whilst a quarter of 35 to 54 year olds and a fifth of over 55s also think they’ll save more.

Appetite for the tax-free accounts waned with customer deposits dropping by £2.8billion to a total of £226billion during the month. Many experts blamed poor rates and competitive returns from current account offerings as the reason.

In addition, new Pensioner Bonds - set for release in January - may mean many could wait to grab a four per cent rate in the New Year, far higher than anything being offered in the cash Isa stakes.